Plasticized poly (lactic acid) (PPLA) was prepared by melt blending poly (lactic acid) (PLA) with 10 wt% of poly (ethylene glycol) (PEG), with varied molecular weights range from 400 to 4000. The structure, thermal property, morphology, and surface free energy of the PPLA were investigated by Fourier transform infrared spectroscopy (FTIR), differential scanning calorimeter (DSC), thermogravimetric analysis (TGA), scanning electron microscopy (SEM), and contact angles (CA). The resulting PPLA results indicated that the introduction of PEG to the blend systems resulted in a ductile fracture, a decrease in the melt temperature (Tm) and glass transfer temperature (Tg), and an increase in the degree of crystallization (χc), which indicated an improved flexibility. In addition, the polarity of the PPLA increased and the surface free energy decreased. The resulting PPLA was subsequently used as matrix to blend with wood flour to prepare composites. The mechanical strength, melting behavior, thermal stability, and microscopy of the PPLA/wood flour composites were also evaluated. These results illustrated that the plasticized PPLA matrix was beneficial to the interfacial compatibility between the polar filler and the substrate.